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Further fighting for Fairfax control

TONY EASTLEY: West Australian mining magnate Gina Rinehart is reportedly now after three seats on the board of Fairfax Media.

The company is struggling - Fairfax announced yesterday it was cutting 1,900 jobs over the next few years and putting a pay-wall around its internet content.

Mrs Rinehart has increased her shareholding in the company to just over 18 and a half per cent.

Ashley Hall reports.

ASHLEY HALL: From March next year, Fairfax will shrink its flagship titles, The Sydney Morning Herald and The Age in Melbourne, to what it calls a compact format. It's a move being made by major newspapers around the world.

In London, the Guardian, the Independent and the Times have already reduced their size.

ANNE SPACKMAN: The biggest surprise for us was that we didn't realise how much the old shape put people off.

ASHLEY HALL: Anne Spackman is the assistant editor of the Times newspaper in London. She was in charge of the project to change the paper from a broadsheet to a compact format about eight years ago.

ANNE SPACKMAN: And when we change to the smaller size, with all the sort of design changes which inevitably follow from that, we found that we had a much larger audience of people - and as a result we increased our sales quite well.

ASHLEY HALL: I remember at the time that this was flagged, there was concern that people of influence - that judges, that politicians - wouldn't be seen dead reading a newspaper in a compact format.

ANNE SPACKMAN: Yeah, I think you're always more scared obviously about what you'll lose, because you're more aware of those people. But if you have, you know, hundreds of people who say they're not happy, you'd have tens of thousands whose voices never heard before who are happy and go out and vote with their feet.

ASHLEY HALL: Anne Spackman says the switch to a smaller newspaper boosted sales by about 10 to 15 per cent, but most of the paper's growth now comes from digital subscriptions.

ANNE SPACKMAN: We see a lot of families where they might have got one copy of the Times into the household in the morning, but now you'll get a copy of the Times and one of them will have a digital subscription because they'll read it on their iPad.

ASHLEY HALL: It's figures like those the Fairfax board is no doubt hoping for to ease some of the pressure it's facing from the mining magnate Gina Rinehart.

With nearly 19 per cent of the company's shares, Mrs Rinehart is reportedly asking for three seats at the board table, including the deputy chairmanship, as well as editorial input.

JASON WILSON: It's going to become increasingly difficult to deny her seats on the board. It's going to be increasingly difficult to resist her attempts to make Fairfax more like the media enterprise that she wants it to be.

ASHLEY HALL: Jason Wilson is an assistant professor in journalism at the University of Canberra.

JASON WILSON: She probably will seek to change the direction of the enterprise, including its editorial direction, and it's difficult to see, you know, how much the board can do about that if she keeps buying stock.

ASHLEY HALL: The West Australian correspondent for Forbes magazine, Tim Treadgold, says Mrs Rinehart's likely to win control of the company, even if she doesn't buy any more stock.

TIM TREADGOLD: I think the modern system of, which appears to circumvent takeover laws, passes control to an aggressive person in the way James Packer's moved on the casino business and the way in which Kerry Stokes moved on WA newspapers.

They achieved their desired objective of control without paying a full control premium - quite legally, quite allowed to do it, that's the law.

ASHLEY HALL: Although Tim Treadgold believes the Government will probably look to revamp those laws soon.

TONY EASTLEY: Ashley Hall reporting. And you can hear extended interviews from that story on our website later this morning.

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